Mergers in Multidimensional Competition

Horizontal mergers are often driven by the desire to exploit R&D complementarities. We investigate the positive features of such a merger when oligopolists compete both in process R&D and on the product market. For a non‐trivial degree of R&D complementarity, we show that the merger has the following intuitively appealing features independently of the strategic variable in market competition: insiders benefit; outsiders are harmed; and insiders end up larger than outsiders. These results contrast with those of traditional models of merger to achieve market power alone, which are known to be counterintuitive and sensitive to the mode of product market competition

Business · Competition (biology) · Complementarity (molecular biology) · Counterintuitive · Economics · Exploit · Industrial organization · Market power · Market share · Microeconomics · Product market · Computer Science · Corporate Finance and Governance · Digital Platforms and Economics · Finance · Merger and Competition Analysis

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